Turkmen gas field to be world's second-largest

* British auditor prepares new reserve estimate

* South Iolotan field second only to Iran's South Pars

* Potential gas supplier to China, Europe

By Dmitry Solovyov

TURKMENBASHI, Turkmenistan, May 25 The British
auditor of Turkmenistan's South Iolotan gas field said on
Wednesday that its forthcoming report on the deposit would
reveal it to be comfortably the world's second-largest.
Gaffney, Cline & Associates (GCA) expects to present a
revised audit to Turkmen President Kurbanguly Berdymukhamedov in
mid-June that will show South Iolotan to be second only in size
to the South Pars field in neighbouring Iran.

"It appears that the South Iolotan field is now easily the
world's second-largest gas field in terms of gas-in-place,"
Peter Holding, GCA general manager for Russia and the Caspian,
told an energy conference.

Turkmenistan, a reclusive Central Asian state of 5 million
people, holds the world's fourth-largest natural gas reserves
and is seeking to diversify exports from Soviet-era master
Russia to China, Iran and Europe.

Berdymukhamedov, who wields virtually unlimited powers in
Turkmenistan, is pinning the future prosperity of his desert
nation on developing multiple gas export routes. Gas from South
Iolotan could flow to China and also in a westward direction.

GCA estimated in 2008 that South Iolotan could contain
between 4 trillion and 14 trillion cubic metres (tcm) of
gas-in-place, which at the time ranked it potentially as the
world's sixth-largest natural gas deposit.

Turkmen government officials attending a conference in a
Caspian Sea resort on Wednesday said that the state now
estimated reserves at South Iolotan to be equal to 21 tcm.

Holding declined to reveal the revised GCA estimate prior to
telling the president. The auditor had originally been due to
complete its work during the spring.

"It gradually became obvious that the considerable volume of
new data which had been made available clearly demonstrated a
very significant increase in the overall size of the South
Iolotan structure," he said.

Holding said new seismic data and wells drilled had proven
that South Iolotan and the adjacent Osman filed were actually a
single structure.

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Turkmenistan plans to more than treble gas output to 230
billion cubic metres annually by 2030, of which 180 bcm will be
exported. South Iolotan, which sprawls over 3,000 sq km about
350 km (220 miles) southeast of the capital Ashgabat, will
supply a large portion of this increase.

Four companies -- Chinese state oil and gas firm CNPC,
Petrofac Emirates (PFC.L) and South Korea's LG International
Corp (001120.KS) and Hyundai Engineering Co (000720.KS) -- won
$9.7 billion worth of contracts in December 2009 to develop the
field. They will drill and build gas plants.

"The South Iolotan field is so big that it can sustain
several developments in parallel," Holding said.

China, which has pledged over $8 billion in loans to
Turkmenistan in the last two years, is well-positioned to take a
large proportion of the gas that will eventually be pumped from
South Iolotan.

China took more than 4 billion cubic metres (bcm) of Turkmen
gas last year via a pipeline that snakes nearly 2,000 km (1,250
miles) through Central Asia into its northwestern Xinjiang
region. Turkmenistan has said supplies could rise to 17 bcm in
2011 and 20 bcm in 2012.

Another future option for Turkmenistan would be to deliver
gas via its own East-West pipeline to the Caspian shore, from
where it could cross the sea to Azerbaijan and link up with the
planned Southern Corridor to Europe.

The European Union on Wednesday reiterated its desire to
boost energy ties with Turkmenistan as it seeks alternative gas
suppliers to cut its reliance on Russia.

"Europe and Turkmenistan are moving to take their energy
cooperation to a higher level," Norbert Jousten, ambassador and
head of the delegation of the European Union to Kazakhstan, told
the conference.

"The export of Turkmen gas to Europe is a goal we share," he
said. "Our approach is to maximise diversification, to make sure
that the risk of total gas cut-offs is avoided."
(Writing by Robin Paxton)

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